2010 FINAL RESULTS

ANNOUNCEMENTS

PRESENTATION TO ANALYSTS9 MARCH 2011

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Outline Business Environment Performance Highlights Full year Financial Results Operational Overview Business Development Corporate Social responsibility Future Outlook Q & A

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Business Environment Zambia achieved a GDP growth of 7.1% in 2010 Growth was mostly driven by agriculture, construction and mining

sectors most of which are energy intensive sectors There was notable increase in copper production and copper

prices Inflation at year end was 8% Power supply during the year greatly improved due to completion

of rehabilitation works at Kariba by Zesco Government continued to promote investment in the energy

sector The need to implement cost reflective tariffs has been identified

and in line with this domestic, commercial and industrial tariffs were revised upwards by ZESCO (note: CEC tariff is negotiated separately)

CEC is currently in negotiations with its customers to review mine tariffs

Capital market also posted positive results with LuSE index closing at 19%; CEC’s share price posted a 43% gain

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CEC 2010 Performance Highlights

Revenue increased by 9%

Gross profit increased by 8.3 %

Earnings per share rose by 7%

Load sales volumes increased by 8%

Capital expenditure increased by 87% to US$13.7m

Reduction in working capital position impacted by

High Capex US$13.7m

Debt repayment US$ 7m

High effective tax payment us$6.5m

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2010 Full Year Financial Results

US$ 000 2010 2009 2008 2007 2006

           

Revenue 167,294 154,169

177,486 131,746

127,280

Gross Profit 45,856 42,371

49,526 38,746

37,383

EBITDA 30,293 28,682

26,419 22,152

21,293

PBIT 19,602 19,126

17,222 13,306

12,745

Net Profit 12,719 11,920

10,143 7,251

7,915

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Financial Results Increase in revenue to US$167.3 is attributed to:

8% increase in maximum demand by CEC customers Tariff indexation in line with US PPI

Cost of sales went up by 9% due to: An increase in power purchased from Zesco Indexation of Zesco tariff to CEC by US PPI

Gross profit increased by 8.3% to US$42.4 in line with increase in sales to CEC’s customers

Operating costs increased by 14.7% as a result, in part, of: 14% increase in depreciation of fixed assets Insurance costs remaining constant at US$1.5 million 35.5% increase in staff related cost

Significant factors were additional actuarial costs and lower capitalisation of labour on projects

47% increase in stores and maintenance Other operating expenses reduced by 30%

PBIT and net profit increased by 3% and 7% respectively EBITDA increased from US$28.6 million in 2009 to US$30.3 million Total capital expenditure for the year was US$13.8 million Key investments were made to both primary and secondary equipment of CEC’s transmission network

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Financial Results (continued) Finance expense reduced by 39% to US$1.1 million from

US$1.8 million due to Reduction in LIBOR rate applicable to the Company’s debt facilities Reduction in the quantum of outstanding loans compared to the

previous year

However negative working capital of US$7.1 million was recorded by year end. CEC has secured a loan of US$ 10 million to increase the Company’s current assets

Retained earnings rose by 8% to US$48.8 million

Total equity increased by 2% to US$161 million

The net book value of fixed assets was US$ 239.3 million at year end compared to US$236.2 million

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5 Year Revenue TrendRevenue

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

YEAR

US

$`0

00

Revenue

Revenue 122,164 127,280 131,746 177,486 154,169 167,294

2005 2006 2007 2008 2009 2010

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5 Year EBITDA/Net Profit Trend

EBITDA/NET PROFIT

0

5000

10000

15000

20000

25000

30000

35000

Year

US

$ M

illi

on

EBITDA Net Profit

EBITDA 21293 22152 26419 28682 30293

Net Profit 7915 7251 10143 11920 12719

2006 2007 2008 2009 2010

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Capital Market Performance CEC share price posted a 43% increase

(K430:2009; K615:2010) A total dividend paid remained constant at US$

10 million Total dividend per share for the year was US1.00

cents (equivalent to K48.19) Gross dividend yield based on year end share

price of K615 was 8% No final dividend is proposed in respect of this

financial year Weighted basic & diluted EPS was US1.27 cents,

an increase of 7% over 2009

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Operational Review Overall good operational performance was achieved. Customer demand increased and was mostly driven by

resumption of operations, return to full production and resumption of expansion projects by our mining customers

Only COSAK smelter has remained under care and maintenance (Chambishi Metals PLC)

High voltage transmission and distribution systems were maintained to satisfactory standard

However the country experienced another blackout in June 2010 which resulted in loss of power for about 5 hours

Industry’s response to the blackout was much better than the previous years

Another blackout occurred in a neighbouring country in August which ideally would have affected the Zambian system. However the Zambian network remained intact due to mitigating measures that have now been put in place

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Operational Review Customers maximum demand increased by 8% Energy sales also increased from 3,338GWH to 3,640GWH

in 2010 Increase in copper prices continues to spur on the

measurable demand ramp up by most customers Domestic wheeling for Zesco recorded a marginal increase

of 0.2% PSAs for two of our mining customers, Chibuluma Mine and

NFCA which are due to expire in 2012 were extended by a further 10 and 15 years respectively

A cost of service study was commissioned during the year The study will help CEC to establish correct customer tariffs

based on cost of finance and asset base CEC commenced discussions with Zesco and its customers

with a view to migrating tariffs to cost reflective levels

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2010 Trends in Power sales and Copper Price

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Load

505 514 521533

436

470

0

50

100

150

200

250

300

350

400

450

500

550

600

2005 2006 2007 2008 2009 2010

YEAR

LO

AD

(M

W)

Load

5 Year Load Trends

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Growth Prospects

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Expansion in Core Business These projects relate to the supply of power to new mining

operations on the Copperbelt: CEC signed up a new customer, Konnoco, for supply of

power to its Konkola North Mine. The mine will take up an initial 40MW with potential to increase 100MW in future

Progress was made on the development of the Muliashi Project in Luanshya, that will require 30MW

Other projects progressed during the year include: The Synclinorium project by Mopani Copper Mine in

Kitwe CRO project by Konkola Copper Mine in Chingola

On completion of these projects are expected to require in excess of 100MW additional power

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Kabompo Gorge Hydro Project The final feasibility report indicated that that the project is

feasible, provided that tariffs can be adjusted to cost reflective levels and geological and hydrological risk allocation is managed

Design requires: dam 47.5m high, 123m long, reservoir created of 3,485 Hectares

Proposed output is 40MW, 166GWh per annum The EIA was completed in December 2010 and final report

submitted to the Environmental Council of Zambia CEC engaged Greengate LLC of USA as financial advisor and

GBO as tax advisor for the project Land acquisition and Concession Agreements are being

discussed with Government The Government and local leadership have been engaged at

various stages, pro-active CSR policy Following Expressions of Interest, a short list of 5 contractors

has been formed to submit full bids

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Projects Under Development 2nd DRC – Zambia Inter-Connector

Construction of the new double circuit 220kV inter-connector between Zambia and DRC is ongoing

The cost for the Zambian portion is US$16 million (including $4m already incurred)

Luapula River & Supply to Luapula Province Luapula River holds potential for five different hydro schemes,

with estimated potential of circa 850MW Transmission line from Copperbelt to Luapula Province will

have a positive developmental effect to the economy CEC submitted a request to the PPP Unit of Ministry of Finance

to undertake feasibility study on hydro sites on Luapula River The request was granted by the Government Studies on the river schemes commenced during 2010

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Renewable Projects

A unit has been created in the company to focus on development of renewable energy projects

Key developments include: Commissioning of a bio-diesel plant in Kitwe,

capable of producing 1000 litres / annum Grant funding secured to evaluate bio-mass

generation in Copperbelt and NorthWestern province

Development of solar facility at Kabompo Gorge

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Telecommunications CEC consolidated its investment in optical fibre

infrastructure by purchasing the underground fibre in Lusaka and other commercial centres from Realtime

The total network now operated by CEC is 770KM The network is currently being extended to cover

new towns including Livingstone, Kabwe and Solwezi

Customer base includes banking, mining companies, mobile and internet service providers

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Governance Good corporate governance and social

responsibility practices continue to be implemented

CEC benchmarks its corporate governance practices against the LuSE code

Board Committees chaired by non-Exec Directors Audit SHE Employee Remuneration & Development Executive Business Development

Audit of communication recently completed, suggested improvements being implemented

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Various health intervention programmes were implemented which include Rollback Malaria programme HIV/AIDS awareness programme and ARV provision

Social projects undertaken include: Monetary and material donation to Namianga Secondary

School Renovation of the Arthur Davies stadium Commissioning of new gym in Kitwe Support to UNZA school of engineering through

seconding a senior manager

2011 emphasis on: Development of social facilities at Kabompo Gorge Ongoing support for higher education, youth and health

Corporate Social Responsibility

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Recognition CEC was awarded an international prize for the

quality of its on-line financial reporting by London based World Finance

CEC was also recognised by the Africa Investor of South Africa as ‘Developer of the Year 2010’

The ZRA awarded CEC for good performance in maintaing tax records and timely submission of tax payments

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Summary – Shareholder Issues Core Business – key issues:

Increasing sales volumes and unit tariffs increasing above inflation

Increasing capital investment required Maybe power shortages in 2 to 3 years if economy grows

faster than power generation, improve when new large plants are commissioned

Kabompo Gorge Good progress in design and tendering, environmental,

financing and concession agreements Commencement will require formation of a SPV which

will impact CEC’s balance sheet Developmental benefits – last new significant hydro was

constructed >30 yrs ago in Zambia

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Summary – Shareholder Issues New Power Developments

Focus on investment in strategic generation projects Development of renewables unit Creation of an SPV for greenfield developments to

ringfence and share development risks

Telecoms Focus on fibre rollout and sales Open fibre network available to other operators

Dividends Reduction in payout % to provide capacity to re-invest

and grow Consistent dividend payout policy to be retained